How Flex Determines Eligibility

There is no official IRS list of HSA/FSA-eligible products. Eligibility is a legal standard applied to a product, not a lookup against a government catalog. This page explains the standard Flex applies.

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The foundation: IRC §213(d)

Eligibility begins with Internal Revenue Code Section 213, published on August 16, 1954 as part of the Internal Revenue Code of 1954, to provide a framework for U.S. citizens to deduct unreimbursed medical expenses exceeding a portion of their adjusted gross income. §213(d) defines medical care expenses as amounts paid for:

• The diagnosis, cure, mitigation, treatment, or prevention of disease, or
• for the purpose of affecting any structure or function of the body

The tax code further clarifies that medical expenses include transportation primarily for and essential to medical care, qualified long-term care services, insurance covering medical care (including premiums), and expenses incurred for the taxpayer, their spouse, or a dependent. Every determination Flex makes maps back to this definition. It is deliberately broad — which is what allows products that did not exist when the statute was written to qualify.

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The practical guide: IRS Publication 502

Several decades later, in the late 1990s, the IRS released Publication 502 as the practical explanation of §213(d). The relationship is best understood as “the law” and “the user manual” — Publication 502 operationalizes the §213(d) framework with examples and edge cases. The most consequential thing it added is an exclusion: That distinction — medical treatment versus general wellness — remains central to eligibility determinations today, and it is the line most eligibility questions ultimately turn on. Publication 502 also gives examples of qualifying expenses, but the IRS is explicit that the list is non-exhaustive, intentionally leaving room for interpretation and future expansion. One more nuance worth knowing: Publication 502 was written for tax deductions of medical expenses, not explicitly for HSA/FSA accounts. It nonetheless remains the primary reference point administrators use for eligibility determinations.

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Eligibility can expand over time

The IRS operates under powers granted by Congress, so federal legislation, executive actions, and IRS guidance such as Revenue Rulings and Notices can materially expand or modify HSA/FSA rules. The most recent significant expansion is the CARES Act of 2020, which permanently expanded eligible expenses to include:

• Over-the-counter medications — no prescription required
• Menstrual care products

Neither category was explicitly listed in Publication 502, underscoring how Congressional action can shape eligibility beyond the IRS’s original framework. Earlier expansions came through Revenue Rulings:

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The two eligibility categories

Over time, the industry has converged on two eligibility categories. These terms do not appear verbatim in IRS guidance — they are the shorthand administrators and processors use to operationalize the IRS rules in practice. Many always-eligible examples are explicitly listed in Publication 502, which is why administrators rely on them as benchmarks when building their own guidelines.

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Where Letters of Medical Necessity come from

Dual-purpose products are where a Letter of Medical Necessity (LMN) becomes essential. The term itself does not appear in IRS publications; its use traces back to IRS clarifications around the year 2000, when Publication 502 was updated to state that nutritional supplements, vitamins, herbal products, and similar items are not eligible unless:

1. They are recommended by a medical practitioner, and
2. They are intended to treat a specific medical condition diagnosed by a physician

That clarification created a formal pathway for conditional eligibility — not only for supplements, but for a broad range of products and services. See Telehealth Partnerships for how Flex works with licensed clinicians to make this available at checkout.

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The line can be narrow

The medical-versus-general-wellness distinction frequently produces different answers for products that look nearly identical. A few real distinctions from the Flex catalog: The same pattern holds across categories. For a bicycle, the frame, chain, and pedals can qualify as exercise equipment; the helmet, lock, and water bottle do not.

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HSA vs FSA differences

Eligibility rules can differ between account types because of who owns the account. HSAs are individually owned and governed primarily by IRS rules. FSAs are employer-sponsored and employer-owned, so the employer has discretion to define what is reimbursable under their specific plan. Most employers align their FSA policies with IRS guidance, particularly for always-eligible expenses. They may apply stricter standards to dual-purpose items. Additionally, HRAs (Health Reimbursement Arrangements) are also employer-sponsored and employer-owned, so the same employer discretion applies.

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